Cost, Insurance, and Freight (CIF)
An Incoterm where the seller pays for cost of goods, insurance, and freight to the named destination port. Risk transfers to the buyer once goods are loaded on the vessel at origin.
Cost, Insurance, and Freight (CIF) is an Incoterm where the supplier includes the cost of ocean freight and basic marine insurance in the quoted price. While this sounds convenient, it is important to understand that risk still transfers to the buyer at the port of origin -- the same as FOB. The seller merely arranges and pays for shipping on your behalf.
Many new importers prefer CIF because it feels simpler: you get one all-in price to your destination port. However, experienced importers generally avoid CIF terms. Suppliers often mark up freight costs by 20-40% compared to what you would pay using your own freight forwarder. The insurance included in CIF is typically the bare minimum required (110% of invoice value with Institute Cargo Clause C), which may not adequately cover your goods.
CIF can make sense for very small shipments where the hassle of arranging your own freight outweighs the cost savings, or when you are first starting out and do not yet have a freight forwarder relationship. As your import volume grows, switching to FOB terms will almost always save you money.
Why it matters
If a supplier only quotes CIF, ask for the FOB price separately. Compare their freight cost to quotes from independent freight forwarders -- you will often find significant savings.
Practical Tip
If a supplier only quotes CIF, ask for the FOB price separately. Compare their freight cost to quotes from independent freight forwarders -- you will often find significant savings.
You'll hear this when…
When requesting quotes
“"Please provide your best CIF price for 500 units shipped to Los Angeles."”
When reviewing shipping documents
“"The bill of lading shows the goods were transferred under Cost, Insurance, and Freight (CIF) terms at the port of Shenzhen."”
When negotiating payment
“"We'd like to confirm whether your quoted price is on Cost, Insurance, and Freight (CIF) basis before finalizing the purchase order."”
Related Terms
Free on Board
FOBAn Incoterm where the seller delivers goods on board the vessel at the named port of shipment. Risk transfers from seller to buyer once goods pass the ship's rail.
Cost and Freight
CFRAn Incoterm where the seller pays for the cost of goods and freight to the named destination port. Unlike CIF, insurance is not included and must be arranged by the buyer.
Incoterms
A set of 11 internationally recognized trade terms published by the International Chamber of Commerce (ICC) that define the responsibilities, costs, and risks between buyers and sellers in international transactions.
Freight Forwarder
A logistics company that arranges international shipping on your behalf, handling booking cargo space, documentation, customs brokerage, and coordinating the door-to-door movement of your goods.
Landed Cost
The total cost of a product delivered to your warehouse, including the product price, shipping, insurance, customs duties, customs broker fees, and drayage. The true cost you must use for pricing and margin calculations.
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